The OPEC+ ministerial meeting is discussing gradual production increases over the next three months, sources say, while the group was still debating as of 11:10 a.m. EDT on Thursday how to proceed with its oil supply management policies.
The OPEC+ alliance is reportedly debating raising its oil output by 350,000 bpd in each of May and June and by 400,000 bpd in July, a source told Reuters.
The market was more or less expecting a rollover of the current cuts or just a slight increase in view of the recent weakness in oil demand with European lockdowns and with Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, reiterating calls for a cautious approach today.
Going into the behind-closed-doors session, the key ministers of Russia and Saudi Arabia spoke at the opening of the meeting and had somewhat diverging views. Russia appeared more optimistic about oil demand recovery and the market as a whole, while Saudi Arabia hinted at a very cautious approach.
The situation on the global oil market has improved since last month’s OPEC+ meeting, Russian Deputy Prime Minister Alexander Novak said in his speech.
But the Saudi minister said that “Until the evidence of the recovery is undeniable, we should maintain this cautious stance.”
The Saudi remarks had analysts speculate that there would be another rollover of the current cuts.
As the meeting advanced to the session closed to reporters, media outlets began to report various sources as saying that there would be an increase in the group’s production over the next three months.
Saudi Arabia was also reportedly submitting a plan to ease its extra unilateral cut of 1 million bpd over the course of the summer. According to OPEC+ sources, the Kingdom will unwind its additional voluntary 1mn b/d cut by 250kb/d in May, 350kb/d in June, and 400kb/d in July.
Oil markets continue to react with mixed feelings to the outcomes of the OPEC+ meeting, with both the WTI and Brent benchmarks rising up to 2% on the day before the news broke, but giving up some gains shortly after the group decided to gradually increase oil output over the next three months.
OPEC+'s decision to hike oil production by around 1 million bpd over the next three months may sound bearish to some, but given the increased demand for petroleum products in the U.S. and Asia this summer, it seems that a slight output increase is the most acceptable decision for most parties.
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By Tsvetana Paraskova for Oilprice.com
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